Defense spending is nearly as large, at 9.8 percent, ranking the state third — and again tied with Virginia and D.C. — behind Hawaii and Alaska.

"The District of Columbia along with its neighboring suburbs in Northern Virginia and suburban Maryland are particularly vulnerable due to the multitude of defense agencies and contractors located in the region," wrote Mark Vitner and Michael A. Brown, economists at Wells Fargo.

Sequestration is a set of across-the-board federal spending cuts scheduled to start March 1, unless Congress can agree on an alternative. The Wells Fargo economists said it looks "more and more likely" that the cuts will kick in.